NEW YORK,27 February 2007 - United Nations Secretary-General Ban Ki-moon said Wednesday that the Middle East peace process must persevere in order for Israelis and Palestinians to exist peacefully as neighbours though of "enormous" challenges.

In the meeting of 2007 session of the United Nations Committee on the Exercise of the Inalienable Rights of the Palestinian People in New York, Mr, Ban said that "Today, we are at a critical juncture in efforts to move beyond crisis management, and renew efforts toward genuine conflict resolution.

Palestinians crave freedom and independence while Israelis yearn for enduring security, yet "neither can achieve their legitimate demands without a settlement of the conflict," he added.

The Secretary-General pointed to actions taken by both sides as seriously impeding progress towards peace.

"Israel has launched military operations, imposed severe movement restrictions and, after Fatah's defeat at the hands of Hamas in last year's elections, withheld the Palestinian Authority's tax and customs revenues. Such actions have hastened the onset of a humanitarian crisis in the occupied Palestinian territory, and have also weakened endeavours to build a viable Palestinian State."

Meanwhile, rocket and suicide attacks on Israeli civilians have only tightened restrictions on Palestinians by Israelis. A drop in donor support for the Palestinian Authority due to its not adhering to the peace process has further incapacitated its Government.

"Indeed," Mr. Ban stated, "nearly all of the developments of 2006 took us further from the goal shared by a majority of Israelis and Palestinians: two States, Israel and Palestine, living side by side in peace and security."

He lauded the Mecca accord, reached on 8 February, in which Hamas and Fatah agreed to share power, and expressed hope that the agreement will be effectively implemented.

The Secretary-General also noted revived discussions between Palestinian President Mahmoud Abbas and Israeli Prime Minister Ehud Olmert, urging them both to proceed in process as partners. Mr. Ban also cited United States Secretary of State Condoleezza Rice's hosting of talks with both leaders as a positive sign that Washington is actively working with the parties to bring an end to the conflict.

He also commended the increased activity of the Quartet - the high-level diplomatic group comprising the UN, United States, Russia and European Union - which has met twice this month to discuss the best methods to ensure a permanent peace.

The Secretary-General said that he urges "all of us to take advantage of the political opportunities at hand" to "find a path that has eluded us for so long, and arrive at our commonly hoped for destination of a comprehensive, just and lasting peace in the Middle East and the creation of an independent Palestinian State living side-by-side in peace with Israel."

M.H.(14:08 P)(12:08 GMT)